Two analysts debate the bull and bear cases for Tesla

I want to start off. We got to start off with the bear case. I think, Craig, you’re one of the most bearish on the street. Your price target is about half with the streets looking for, is that just based on a slowdown of sales, Chinese competition or is there something else in there? You know, what we see as Tesla, Tesla is fundamentally overvalued, egregiously overvalued. They don’t really have anything that Toyota doesn’t. Why would they say trade at such a massive premium? You know you look at a company that’s traded like a growth company, but there is no growth here in the first quarter. We’re going to see continued price cuts, you know over the course of this year. I think you know this little price price increase for April 1st is a little bit of gaming trying to juice the numbers in what’s going to be a very weak quarter. And I think consumers out there expect price cuts later on this year. So you’re going to see, you’re going to see you know more negative momentum in the stock and that’s that’s the most important thing. Retail props this up and I think retail is going to keep coming out and drive the stock down. All right. So you are very bearish. We’re going to go to the complete other side. Tom, you’re pretty bullish. Your price targets about 50% higher than the street. So you believe that people may be over blowing the growth concerns even with China down quarter over quarter, Europe also down quarter over quarter. We don’t talk often about that story, but you say the lofty valuation of Tesla 60 times forward earnings. That has nothing to do with E VS in your mind. Yeah, that’s right. And actually I agree with what what your speaker was saying just now with what’s happening in the quarter, I think everybody knew Q1 was going to be weak. There was a big pull forward of demand into Q4 because of the IRA expiry. There was also the Red Sea impact on Europe in February this year. We’ve known that things were slowing down. Model 3, Model Y are getting saturated. The newer model isn’t coming until 2025. This is a company you need to look at in tectonic terms. And in any event, this is not Toyota. It’s not a car business, it’s an Autonomy business, and it’s an energy storage business. I’d love to hear what your speaker thinks is the valuation of energy storage. Going from 100 GW hours to two terawatt hours 20 fold increased Tesla’s 15% market share of that business. And those margins are actually better than the auto business. I think that’ll be worth more for Tesla than its car business. We haven’t even talked about Autonomy. Giving FSD for free for a month could be really big to catalyze growth here, get volumes reignited for Q2. All right. So look, you’re throwing down the gauntlet. That’s what we want here, Tom. We appreciate that. So Craig, I’m going to come over to you about the this, the storage question 1st and we’ll get back to full self driving. What is your answer about the fact that he’s basing the valuation again on autonomy and also storage. So Autonomy, robotics and storage. Of the three, the three subjects that people care about most, I’m the only analyst on the sell side, only analyst on the street that actually worked in the battery industry, worked in the storage industry. I’ll tell you, margins, they’re razor thin. I work with a number of companies that are very active there. You know, a couple years ago you saw the exit of NEC, which dominated that market. You know, there’s a lot of frothy bullishness. We have to be careful, careful of the expectations. There’s some good companies out there. Tesla is one of them. But you know, you don’t get to, you know, $600 billion valuation on storage. That’s just not rational. So robotics, Boston Dynamics is the winner. You know, Hyundai bought that for 1.1 billion from SoftBank. You know, maybe it’s worth 10 today. It’s not worth 600, you know, and this whole AI thing, FSD, you know if you’re going to do level 4, it’s going to consume more electricity, more electrons to support the compute of that level for autonomy than the drivetrain. That’s a non starter. So, you know, I look at this and I say there’s some fundamental flaws in the bull thesis and you know, it’s egregiously overvalued. All right. So Tommy, I think he answered a couple of your points. He also worked in the battery battery industry. But I want to come back to you, Tom, I know you’re very bullish, but when it comes to full self driving, have we seen a lot of difficulties when it comes to this? We’ve seen some other companies get out of that space just because of the trouble executing. Yeah, that’s right. I just really quickly just want to say energy storage Pessels actually already making more profit on that business than they are on their car business actually went to the Lathrop facility a few weeks ago and saw it first hand, also met with utilities who who suggest the growth there. On FSD, you’re right, it’s really difficult to do this. That’s why a lot of companies are pulling out of it. FSDI just want to correct also you speaker, it’s not level 4, right? It’s level 2 plus. It’s 80% of your driving on highways. Tesla’s the only one that does autumn automated lane changing. It does exits for you. I think a lot of the concerns have been these accidents that you see happening on small roads. That’s when you and I can just take the car over. But the 80% of the driving that happens on highways, I’m telling you, this product is amazing. You guys need to try it. It is typically amazing. No other really automaker has something on the road with this many miles and now they’re going to get to try it. I do think the pricing is too high. Once they drop the pricing and tax rate goes up, you could get an economy multiple on that. It’s a level 2 plus offering, not level 4 just yet. All right, We’re getting a little bit in the weeds with level 2 plus level 4. But you’re saying it’s still in the early stages of full self driving. I think that’s the real point that you’re trying to make before I let you guys go, sometimes this stock, it trades on the delivery numbers. So Tom, first you what’s your expectations for deliveries? Do you think that Tesla meets those estimates or not? Yeah, I mean I just got my estimates yesterday. Actually I’m at 4:46. So yeah, it could even come in below. So I I definitely think you could. Estimates are I think at 461 as of yesterday. So it could probably miss. But I think the buy side is already there but it but it doesn’t change your bull case. Craig giving you the last answer then we got to get you know something like 43440. That’s that’s where I think the numbers come in. It all comes down to this tap up on prices in the US. Does it actually pull forward? If they beat though, does that change your your rating, your price target? Does it change your view at all? Doesn’t doesn’t change anything fundamentally.